For more than 120 years, Eastman Kodak Company's business has been "photographic," centered around the manufacture of film related products. Countless birthdays, vacations, and other memories have been preserved and shared on Kodak film and paper. Hollywood movies have been providing entertainment for many decades, while Kodak medical and dental x-ray film has been serving the health care needs of people the world over for more than a century. Documents by the billions have been recorded on Kodak microfilm and other commercial document management products. Kodak aerial films have mapped the earth. All these activities and more were made possible by the complex chemical technologies of film-making. But that is changing.

September 2003 marked a watershed in the history of Kodak. Recognizing that digital imaging is rapidly replacing traditional film-based technologies, Kodak announced that while it will continue to manufacture film well into the future, it intends to refocus its resources on building a portfolio of products based upon the considerable promise of digital. The marketplace, known as "Infoimaging," is large and Kodak intends to be a leader. Indeed, in just the past five years, the company has already built a consumer digital business that is rapidly approaching $1 billion in sales.

Kodak's transition from film to digital has begun in earnest. Factories around the world will need to be retooled to meet the changing requirements of digital. While there are environmental impacts involved in both technologies, these impacts will need to continue to be managed effectively and responsibly. The expectations of our customers, neighbors, and employees are very high in this regard.

About 20,000 Kodak employees and as many retirees live in the Rochester, New York community, our company's home and largest manufacturing site. We raise our families here. Our children are enrolled in every school in the community. We not only have a moral interest, but a vested interest in making sure that our operations are protective of human health and the environment.

Kodak is committed to meeting or exceeding the environmental expectations of our neighbors and the community. We work closely with the New York State Department of Environmental Conservation (NYSDEC), the U.S. Environmental Protection Agency (EPA), and the community as we manage our responsibilities.

Because we believe strongly that environmental improvement is best accomplished when the public is involved and informed, we maintain a Neighborhood Information Center staffed with knowledgeable people to keep our neighbors up to date on issues and actions that may affect them. A 15-member Community Advisory Council, which includes local residents, community leaders, educators, and environmentalists, meets monthly to review our projects and activities and provide input. And a Pollution Prevention Advisory Panel consisting of four nationally prominent scientists - a physician, a toxicologist, a risk assessment scientist, and a pollution control engineer - reviews our plans and programs and helps guide our decision process.

We offer the following detail on how Kodak people are working to ensure that Kodak is a safe place in which to work and that our factories are surrounded by safe neighborhoods in which to live.

Overview

While the company has major manufacturing facilities in 14 nations around the world, our largest and oldest facility is "Kodak Park" in Rochester, New York. It is the largest industrial site in the northeastern United States. With 18,000 employees and many thousands of contractors, Kodak Park is the largest employer at a single manufacturing site in the state and among the largest exporters of manufactured goods. Each Kodak Park employee creates another job in stores, restaurants, and other businesses in the surrounding area. In fact, Kodak Park has been the primary industrial "engine" that has helped drive employment and economic development in the Rochester area for 100 years.

Started in 1892 by company founder George Eastman, Kodak Park today is nearly four miles long and a mile wide with more than 150 major manufacturing buildings. The facility has 40,000 miles of pipelines, 30 miles of roadways, its own railroad and power plant, and one of the nation's largest private fire departments. Because of the scope of manufacturing activity that takes place in Kodak Park, it should not be surprising that emissions and discharges are proportional to its size. In terms of overall reportable emissions and discharges, Kodak Park stands as the third largest in New York State. Those emissions and discharges have declined steadily for the last 15 years, and Kodak is committed to further reductions in the future.

Progress through planning

Kodak Park's air emissions have been reduced nearly 80 percent over the past 15 years, a record that could not have been achieved without considerable planning. We have a structured management system to manage our environmental responsibilities worldwide. All of our major factories around the world must conform to the same set of Kodak Health, Safety, & Environment Performance Standards. This helps ensure that all our facilities perform responsibly by complying with environmental regulations and honoring our commitments to the communities in which we operate.

Kodak's Health, Safety, & Environment (HSE) organization manages Kodak's environmental plans, policies, and programs. On staff are more than 200 scientists, including physicians, chemists, toxicologists, industrial hygienists, hydrogeologists, engineers, and others whose job is to ensure that we continue to make measurable improvements in the health, safety, and environmental aspects of our products, services, and operations. Their primary mission is to protect the health and safety of our employees, our neighbors, and our customers, and to help ensure compliance with regulations.

Meeting our environmental goals

In 1999, we announced a set of five-year goals to further reduce emissions, conserve natural resources, and strengthen our environmental management system. Although the deadline is January 1, 2004, we've already achieved - or surpassed - seven of the eight goals:

Goal: Reduce energy use by 15 percent (indexed to production) Achievement: Energy use down 29 percent

Goal: Reduce water use by 15 percent (indexed) Achievement: Water use down 39 percent

Because of Kodak's commitment to continuous environmental improvement, we won't stop once these goals have concluded (year-end 2003). A new set of goals will be announced in 2004.

Source reduction and "clean production" practiced here

Few consumer products can be manufactured by any company without creating hazardous wastes. For Kodak, the challenge is to find ways to reduce the generation of waste, while managing it on-site in the most effective and responsible manner possible.

Source reduction is the major focus of our efforts to reduce our environmental impacts. We operate one of the largest closed-circuit manufacturing loops in the world. We recycle and reuse nearly 90 percent of the chemicals we use. One of our five-year goals is to reduce manufacturing waste by 25 percent by the beginning of 2004, but by the end of 2002, we had already achieved a 49 percent reduction - almost double our goal. While some wastes cannot be avoided or eliminated, less waste generated means less to be incinerated, treated, or disposed.

Discharges to water decline

Kodak Park has been making steady progress in reducing its impact on the Genesee River. For example, since 1987, we have reduced reportable releases of metals to the river by more than 80 percent. Our focus is on preventing waste from being generated in the first place rather than simply putting better controls on the wastes as they pass through our wastewater treatment plant. (Due to the nature and size of our operations, we are the only company along the Genesee River to own our own wastewater treatment plant.)

An extensive DEC study of the river in the early 1990s found that it has "a healthy abundance" of aquatic life, including a smallmouth bass nursery just downriver from the Kodak Park wastewater treatment plant.

In response to a Washington, D.C.-based environmental group report that labeled the Genesee River "heavily polluted," an article in the Rochester, NY Democrat & Chronicle Sept. 26, 1996 stated, "The legally permitted discharges of toxic chemicals into the Genesee River-including those from Eastman Kodak-do not endanger human health or the environment, state officials said yesterday."

While the river is designated as "impaired" by NYSDEC and occasionally the beaches along Lake Ontario near the river are closed for short periods during the summer, these conditions are caused primarily by pollution from agricultural runoff and from other materials that do not come from Kodak.

Air emissions reduced sharply

Although not all emissions are down due to changes in worldwide product demand and other factors, overall reportable air emissions from Kodak Park have been reduced 80 percent since 1987. During that 16-year period, emissions of methanol have been reduced by 91 percent; cyclohexane, 88 percent; toluene, 86 percent; and hydrochloric acid, 35 percent -- to name a few. And chlorofluorocarbons (CFCs), which can harm the ozone layer, have been eliminated from direct use in manufacturing.

Methylene chloride is vital to the manufacture of film, having been the primary solvent used to manufacture plastic film base since the mid-1940s. While the company uses millions of pounds of the chemical each year, more than 99 percent is reused over and over again through one of the world's largest closed-loop recycling systems. As a result of this and other initiatives, airborne emissions of methylene chloride have decreased 89 percent since 1987.

Also known as "dichloromethane," the chemical has been used in paint removers and other common products for years. It is classified as an animal carcinogen and as a "probable," or a "possible" human carcinogen, despite the fact that no study has found evidence that it causes cancer in humans. As with many of the chemicals we use, however, we take precautions to handle this material safely and responsibly.

For a more complete picture of our emissions, please visit www.kodak.com/go/hse and click on the Kodak Park Environmental Annual Report.

Reducing dioxins and furans

Kodak is not waiting for the national scientific debate about the relative toxicity of dioxins to be resolved before taking aggressive steps to ensure that emissions are reduced as much as possible.

While there are 210 different forms of dioxin, it's important to note that only one - TCDD -- has been classified as a human carcinogen. Two other forms of dioxins are suspected animal carcinogens, but many of the other forms of dioxin are up to 1,000 times less toxic than TCDD. Almost all of the dioxins generated at Kodak Park are the less toxic forms.

At Kodak Park, the extremely small amount of all dioxins emitted in any year (equivalent in weight to about half a standard paperclip) come from incineration, the burning of coal for steam and electric power, by diesel truck emissions, and by some of our thermal processes. As a result, it would be impossible to eliminate all sources of dioxin emissions within Kodak Park.

Control technology recently installed on our chemical waste incinerator has further cut air emissions of dioxins from that source by an estimated 80 percent. In fact, recent test results demonstrate that emissions from the incinerator are less than half the limit allowed by the EPA.

The EPA and the DEC consider Kodak's incinerators to be operating in a manner that is protective of human health.

New technologies may some day replace incineration, but not yet

Over the past decade, Kodak Park closed two incinerators - one that burned trash and the other that was used to reclaim silver from scrap film and photographic paper - because alternatives were developed to more efficiently manage those waste streams.

Today there are no viable alternatives that would permit us to shut down either of our two remaining incinerators, both used to destroy hazardous wastes. Indeed, the EPA requires certain hazardous wastes to be incinerated because it is the safest and most efficient way to destroy them. Our incinerators comply with all current regulatory standards.

As for the future, Kodak engineers keep up to date on technologies being developed as potential alternatives for incineration. While these developments hold promise for some applications, none of these technologies has been applied to the variety and amount of wastes treated at Kodak Park, and none could meet the strict requirements of the federal Clean Air Act. For example, two of the technologies involve electro-chemical processes that would require a considerable increase in energy. Increased energy demand would require greater coal consumption that would, in turn, increase emissions of pollutants, including dioxins. However, we fully expect that a new technology will be developed somewhere someday that will enable us to eliminate these facilities.

In the meantime, recent tests have shown that Kodak's chemical waste incinerator destroys 99.999 percent of the organic material fed into it. For many materials, the destruction efficiency is even greater. We believe that on-site incineration is safer and more responsible than trucking the waste to a landfill or another treatment facility, and we believe our neighbors prefer this approach as well. It avoids the noise, congestion, and exhaust emissions that would result from the more than 600 of the largest diesel-powered tanker trucks that would be required each year to drive the waste from Kodak Park out through the community to some other facility.

Protecting public health

Of the many health studies of Kodak Park and the surrounding neighborhoods performed over the last 20 years, none has found evidence that emissions are causing any major health impacts.

In addition, the New York State Department of Health over the past six years has issued a series of cancer incidence 'maps,' some by zip code. These maps examined the incidence of certain cancers in Monroe County (Kodak's home), as well as those in all other counties in New York State. While the incidence of a few cancers was below average, some were average, some were slightly above average, and two cancers-leukemia in adult males and prostate cancer-were 30 percent or more above average. Such findings were typical of almost every county in the state. With regard to Monroe County, it's important to note that the State Department of Health made no suggestion of a link to emissions from Kodak or to industry in general.

In the early 1990s, two studies of cancer incidence were conducted by the State Department of Health. The first, in 1991, looked at seven types of cancer. While finding no statistical difference in pancreatic cancer rates for men, it showed a modest statistically higher rate in women living near Kodak Park compared to Monroe County, but NOT when compared to the general NY State population. Both study findings were "suggestive, but not conclusive" and did not show a causal link between exposure and cancer risk.

At that time, the Monroe County Department of Health stated, "It is important to remember that the vast majority of pancreatic cancers in the study area of Rochester and suburban towns of Greece and Irondequoit occurred outside the exposure area near Kodak Park. In fact, more than 80 percent of the women with pancreatic cancer in this study did not live near Kodak Park." And smoking, a known risk factor for such cancers, was not considered in this study.

All new products evaluated for toxic materials

Since 1991, the company has had a strategy in place to address the potential environmental impact of imaging products and systems as they are used and when they are discarded at the end of their life cycle. Known as the Imaging Product Environmental Impact Strategy (IPEIS), specific targets are established for raw materials, design, manufacture, distribution, customer use and customer disposal. In the mid-1990's, IPEIS was expanded to cover non-silver imaging consumables, equipment products, film and paper base materials and packaging. IPEIS is one of the key programs in the company's ISO 14001-registered Environmental Management System.

In addition to IPEIS, Kodak routinely uses the EPA's recently developed P2 Assessment Framework for screening chemicals in the early stages of development of new products. The Framework, which Kodak helped develop, aids in the prediction of a chemical's potential health and environmental effects very early in development so that hazards and waste can be avoided. The Framework is useful to minimize the generation of hazardous wastes while developing and manufacturing safer and more sustainable products. Other benefits include reduced product cycle time, reduced time to market, and significant savings in waste management costs.

100% compliance with all regulations, while difficult, is our objective

Kodak's corporate policy requires compliance with all environmental regulations. While most violations are procedural and do not have any impact on the environment, the reality is that with ever changing requirements and the sheer volume of state and federal regulations today, 100% conformance is extremely difficult for all of industry, not just Kodak. There are literally tens of thousands of details within the regulations, with every detail in need of close attention in order to ensure compliance. Despite the complexities, Kodak Park turned in a better than 99% compliance record based on the company's own Title V compliance assurance system. While most violations are discovered by us and self-reported, some are discovered by government oversight inspectors. When we are out of compliance, which we are from time to time, we get fined. That's the way the system works. (For a list of fines paid by Kodak, refer to our annual environmental report on-line at www.kodak.com/go/hse.)

Other environmental performance measures

Kodak has been making steady, measurable, and substantial environmental progress for many years. We've made many commitments to the communities in which we operate and we've kept every one of them. Here are a few additional Kodak Park accomplishments:

In 2001, 644 million pounds of scrap materials, including solvents, plastics, wood, metals, and other by-products of manufacturing were recycled and reused, making Kodak Park one of the largest recyclers in New York State. We operate one of the world's largest recycling plants for polyester plastic. We take back more than 30 million pounds of used x-ray film for recycling per year and then use the recycling byproducts to manufacture more film.

Even our products have become more environmentally friendly. Seventy-six percent of our single-use cameras are recycled, making them the most highly recycled consumer product in the world, including bottles and aluminum cans.